Gregg,
Check out the Nokia earnings report and tell me if you can find any significant licensing revenue. I couldn't. Companies that created GSM are asking extremely low licensing fees from the manufacturers. All the articles comparing GSM and CDMA I'm familiar with have pointed out the high fees of CDMA as one major factor slowing down CDMA development. This thread is the only place where I've ever seen anyone claiming that GSM licensing fees are high. Several people have now stated that GSM, of course, has sky high licensing fees, everybody knows that...
But how come the revenue streams of Nokia and Ericsson show negligibly low licensing income? Even though GSM already has over 100 million subscribers and there are over 20 companies selling GSM phones? Even if the licensing income is spread to six different companies, how come it looks like GSM is truly an open standard not hellbent to squeezing manufacturers for everything they've got?
Is this part of the worldwide conspiracy to dupe all the industry experts into believing that GSM is much more reasonable towards manufacturers than CDMA? Are Nokia and Ericsson hiding their massive licensing income somehow? I guess we have to wait for "X-Files: Fight the Future" for the answers.
Meanwhile, Cahners In-Stat Group has yet another projection of worldwide standard developments up to 2001.
gsmdata.com European Subscribers
It's interesting to note that in 2001 USA and the world outside Japan and Europe will have more analog subscribers than CDMA subscribers. The figures also give a good overall picture of how the US market is lagging Western Europe by five years in moving from analog to digital standards. They also show the splintering of US digital market into half a dozen competing standards. This is about fifth such projection I've seen in a couple of months and they all show GSM at 50% of global market share between 2001-2003, depending on the survey.
It all gives a compelling rationale for European, Japanese and Korean companies to back strongly W-CDMA. The follow-up for GSM will be immensely important, because GSM is the only standard capable of spawning a worldwide 3G solution. Your attempts to somehow credit W-CDMA to Ericsson don't change the fact that NTT and Nokia are just as important for the standard.
The argument that Qualcomm must have a strong position or there wouldn't be a huge fight over W-CDMA ignores one salient point.
There isn't any huge fight over W-CDMA. I haven't seen one word about Qualcomm in European press covering the W-CDMA development. The test equipment is being built in Japan and Europe, working prototypes of handsets are undergoing finetuning. Just because Qualcomm gives dramatic press releases doesn't mean that the work on W-CDMA has slowed one bit. Japanese may still want to negotiate a compromise and they may be talking to Qualcomm to avert a court fight. But nobody has said anything about stopping W-CDMA because Qualcomm somehow believes its IPR's can't be circumvented. If Qualcomm thinks it can get an injunction to stop W-CDMA deployment in Europe and Japan, it can always try its luck in European and Japanese courts. Welcome! Now that Japanese GDP is shrinking by 5% annualized rate, just how willing do you suppose USA is to start a trade war over some 4 Billion dollar company's wild claims?
Anyway, I think that W-CDMA is not Qualcomm's biggest worry right now. It is now facing a task of redoing its entire product line of aging models while keeping the sales going and predicting the inventory situation correctly. This is the hardest part of being a handset company, not designing phones. I keep hearing comments about how stores are not stocking Qualcomm phones and the ads are not reaching buyers. One hot model can be fatal to any high-tech company if it kills the sales of existing products.
You could be in business five years ago with only one decent model, initial quality problems and big inventories. That was Nokia in 1993. My objection is not about small companies... it's about small companies in maturing markets. Nokia is redoing its entire product line from cheap 5100 to high-end 8810 and 9110 between February 1998 and September 1998. That's six entirely new models in half a year; entry level model, mid-price model, dual band models, luxury model, smartphone. Simultaneously in all continents; new display technology, new battery technology, new software, new materials, new designs, new features. This is the benchmark now. Models older than 18 months are history. By introducing the phones simultaneously throughout the world the regional risk is minimized.
Now that Asia is crumbling the risk of investing in small high tech companies with big sales forecasts in Korea and Japan is bigger than ever. The fast product cycle paradigm is surfacing right now, leaving companies unable to deliver rapid, massive redesigns and wide product ranges vulnerable. That's the ultimate benfit of GSM's high global market share: it gives its proponents the size and reach that is becoming as crucial as it is in the microchip, PC or operating system markets.
regards,
Tero
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